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Jersey Capital Appraisal Service can help you remove your Private Mortgage Insurance
When buying a house, a 20% down payment is usually the standard.
Because the liability for the lender is usually only the remainder between the home value and the amount remaining on the loan, the 20% provides a nice cushion against the costs of foreclosure, selling the home again, and typical value variations in the event a purchaser doesn't pay.
During the recent mortgage boom that our country recently experienced, it was common to see lenders reducing down payments to 10, 5, 3 or even 0 percent.
How does a lender endure the increased risk of the small down payment? The answer is Private Mortgage Insurance or PMI.
This added policy covers the lender in case a borrower doesn't pay on the loan and the market price of the property is lower than the balance of the loan.
PMI can be costly to a borrower in that the $40-$50 a month per $100,000 borrowed is bundled into the mortgage monthly payment and oftentimes isn't even tax deductible.
Unlike a piggyback loan where the lender takes in all the losses, PMI is money-making for the lender because they acquire the money, and they are covered if the borrower is unable to pay.
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Has your home value appreciated since you first purchased? Call Jersey Capital Appraisal Service today at 609-268-1719 to see if you can get rid of your Private Mortgage Insurance payment.
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How can a home buyer avoid bearing the expense of PMI?
With the passage of The Homeowners Protection Act of 1998, lenders are required to automatically cancel the PMI when the principal balance of the loan equals 78 percent of the primary loan amount on nearly all loans.
The law pledges that, upon request of the homeowner, the PMI must be released when the principal amount equals just 80 percent. So, acute homeowners can get off the hook a little early.
It can take a significant number of years to reach the point where the principal is just 80% of the initial amount borrowed, so it's necessary to know how your New Jersey home has grown in value.
After all, every bit of appreciation you've gained over the years counts towards abolishing PMI. So why pay it after the balance of your loan has fallen below the 80% threshold?
Even when nationwide trends predict decreasing home values, understand that real estate is local. Your neighborhood may not be adhering to the national trends and/or your home might have gained equity before things simmered down.
An accredited, New Jersey licensed real estate appraiser can help home owners figure out if their equity has exceeed the 20% point, as it's a tough thing to know.
Market dynamics and neighborhood-specific pricing trends are an appraiser's primary job!
At Jersey Capital Appraisal Service, we're experts at analyzing value trends in Medford, Burlington County, and surrounding areas, and we know when property values have risen or declined.
When faced with figures from an appraiser, the mortgage company will often eliminate the PMI with little trouble. At that time, the homeowner can enjoy the savings from that point on.
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Has your home value appreciated since you first purchased? Contact Jersey Capital Appraisal Service today at 609-268-1719 to see if you can save money by removing your Private Mortgage Insurance premium.
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Want to learn more about PMI and the Homeowners Protection Act? Click this link:
Cancellation of Private Mortgage Insurance: Federal Law May Save You Hundreds of Dollars Each Year
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